A BUDGET splurge is to send government spending surging past the £1trillion mark.

Chancellor Rishi Sunak has an extra £8billion to play with because lower interest rates and inflation have cut costs on national debt.

 Mr Sunak is set to move parts of the Treasury up North — the region set to benefit most from his spending splurge

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Mr Sunak is set to move parts of the Treasury up North — the region set to benefit most from his spending splurgeCredit: AFP or licensors

And he is thought likely to push spending to 40 per cent of GDP — higher than at any time since Tony Blair was PM.

With plans to blow up to £100billion on big-ticket infrastructure projects while boosting day-to-day spending, the new boy at No11 is forecast to hit £1trillion a year by 2023-24.

But economist Jack Leslie, from the Resolution Foundation think-tank that came up with the projections, warned: “Higher spending will require higher taxes.”

The foundation said the Budget on March 11 will mark “a big shift for a traditionally small-state Conservative Party”.

It said reversing austerity in government departments which have endured cuts of up to 30 per cent since 2009-10 will cost £24billion.

Mr Leslie said: “New roads and rail lines are only part of the story for a government wishing to turn the corner on a decade of austerity.

“If the Chancellor wants to increase spending on day-to-day public services in a fiscally responsible way, he will have to change another of his party’s traditional priorities — lower taxes.”

CASH FOR THE NORTH

Suggestions include raising £3billion by scrapping Entrepreneurs Relief, while freezing income tax thresholds would bring in more than £8billion.

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Reforming the £35billion-a-year pensions tax relief system by capping the tax-free lump sum at £42,000 might bring in another £2billion.

The foundation also suggests “rebooting” council tax — ending disparities such as hitting those in the North East twice as hard as those in London.

It comes as Mr Sunak is set to move parts of the Treasury up North — the region set to benefit most from his spending splurge.

The Chancellor is said to be keen to set up an “economic decision-making campus” in the North.

Teesside is said to be the favoured location, with 1,500 jobs moving there.

He is also considering tweaking his predecessor Sajid Javid’s fiscal rules to free even more cash for major infrastructure in the North to back the Tories’ former Red Wall seats.

 Mr Sunak is likely to push spending to 40 per cent of GDP — higher than at any time since Tony Blair was PM

2

Mr Sunak is likely to push spending to 40 per cent of GDP — higher than at any time since Tony Blair was PMCredit: PA:Press Association
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